Following strong volatility of agricultural commodity and food prices towards the end of the last decade, the need was seen for higher transparency on price developments across the different stages of the food production chains. Consequently, the Food Price Monitoring Tool was developed, following the European Commission Communication on 'A better functioning food supply chain in Europe'
The food supply chain (from farm to consumer) consists of a wide range of products and companies in different markets. The process generally connects 3 main sectors: agriculture, the food processing industry and the wholesale and retail sector. Imported agricultural products must also be taken into account.
Prices are established along the food chain through transactions between various actors in the chain (e.g. farmers, food processors, wholesalers, retailers and final consumers). The food supply chain may be short and simple for some food products or more complex for others. It may also differ between countries.
The tool brings together available data on price developments in the different steps of the supply chain. At present, 15 supply chains are covered. For each, the following price indices are used to show developments at successive stages of the chain: price index for agricultural commodities, import price index, domestic producer price index and harmonised index of consumer prices.
Why does the tool include experimental statistics?
Additionally and based on models, Eurostat has estimated the proportion of the price change at one stage of the food supply chain that is transmitted to the next. Although these estimations are produced using well-established econometric methods, the final results should be considered experimental for several reasons. For example, in some cases, the transmission values might be explained by spurious correlation rather than by price transmission. Caution should also be exercised because the products are not necessarily identical at each stage of the supply chain since the sampling is carried out independently at each stage, using different product classifications. Consequently the indicators of price transmission have not reached full maturity and should be considered experimental statistics; they are flagged accordingly in the tool.
To help us improve these experimental statistics, users and researchers are invited to participate in the dedicated discussion on the European Statistics User Forum, focusing on the following questions:
- Do you consider that the food price transmission indicators are clear and easy to understand the way they are currently presented in the tool?
- Can you provide any specific improvement suggestions regarding the analysis of price transmission?
- Is there any additional factor that could be taken into account when calculating the indicators?